Regardless of your views about offshore banking havens, they work. The wealthy are able to exploit loopholes in domestic and international law to stash money in places where it is untouchable.

Could the same be possible for information? Could the world's most curious, revelatory and public interest-driven investigators also stash their goods – journalism – on an island out of reach of the authorities?

Iceland thinks so. It is trying to create a legal system that would protect journalists from the full range of restrictions at work in other countries: libel, official secrets, injunctions, superinjunctions and laws compromising the protection of sources.

The project is heralded by freedom of information campaigners as a potential saviour for journalists in countries such as Sri Lanka, where they have faced violence and even death. The fact that the UK's journalists are seen as a possible beneficiary – as a result of the different threat of costly and inimical libel legislation – is an indictment of the state of our media laws.

But there are many questions remaining about the Icelandic Modern Media Initiative. Would Iceland be willing to violate its international obligations to implement a new law? The Lugano convention, for example, to which Iceland is a party, requires the recognition and enforcement of judgments of the English high court. This makes it difficult for Iceland to avoid so-called libel tourism cases affecting people within its jurisdiction.

What about the provisions on copyright under international agreements? And can Iceland deal with the threats to its cyber security that might flow from publishing material inimical to foreign governments and powerful groups? Iceland has not yet established a "CERT team", the system that the US and other countries use to protect themselves from cyber attacks.

As signatories to the European convention on human rights and the data protection directive, Iceland additionally has obligations to protect personal information and confidentiality.

The country would also have to work out a regime to supervise and regulate foreign media setting up shop there – something that would require at the very least a significant expansion of the capacity of its media regulatory authorities.

These are just some of the hurdles, and some seem more insurmountable than others. A precedent has already been set for the release of subversive, public interest information from Iceland, when Wikileaks published its much-viewed Apache helicopter footage showing the killing of 18 people in Iraq by US troops.

But Wikileaks, with 20 servers in numerous countries and a highly elusive editor, Julian Assange – who recently remarked that he "lives in airports" – already knows how to avoid litigation.

The question for Iceland is whether the British press, or American film-makers, or Ugandan journalists, could and would relocate there.

For UK papers, whose biggest financial threat is the costs of libel litigation, the picture is far from clear. Moving to Iceland would not protect them from the effects of libel claims in the UK, so long as stories were being read here.

For the press in the developing world, there are obvious challenges in finding the resources to relocate, or accessing and publishing stories remotely in countries where everyone and 0everything is not yet online.

Supporters of Iceland's IMMI say that so long as it has some beneficial effect, their task will have been worthwhile. They hope that the project will be replicated by other countries, beginning a new trend in the creation of media law.

But could IMMI be replicated elsewhere? It is unquestionably the product of a unique political and social situation in Iceland – a country desperate both to rebrand itself and to embrace transparency, following the failure of its institutions to predict, prevent or question the doomed journey it embarked on through its banks.

But the fact that Iceland is such a unique country at such a unique moment is also the reason IMMI cannot be easily dismissed. It's audacious, risky, and it's never been done before. If anyone can pull it off, Iceland can.